Chasing Corporations Out Of The U.S.
By ROBERT J. HERBOLD AND SCOTT S. POWELL
Posted 11/16/2009 06:16 PM ET

Unemployment is foremost on everyone's mind today. Yet jobs can continue to leave the U.S. because of the threat of new taxes, the convergence of technology, the ease of digital collaboration and ready access to abundant foreign engineering talent.

Multinational corporate executives may have to move R&D, product development, management and manufacturing overseas when there is no longer a comparative advantage to staying in the United States. A shocking thought for sure, but it's the new reality.

After Japan, the U.S. has the world's highest corporate tax rate, and there is seemingly no willingness by Washington to bring rates down.

In fact, the Obama administration recently proposed taxing the foreign profits of U.S.-based multinationals even when those profits were not repatriated, but backed away when executives threatened to move offshore. Obama aides acknowledge that the administration has set aside the idea for now, but plans to revisit it in a broader tax overhaul sometime next year.

This ambiguity and the threat of new taxes from Washington, such as cap-and-trade, have already prompted 11 major U.S. companies to move offshore in the past year.

Tyco International, Foster Wheeler, Weatherford International, Nabors Industries, Noble Corp., TransOcean International, United America Indemnity, Cooper Industries, Covidien, Ingersoll-Rand and Accenture have all completed or taken steps to change their domicile of incorporation, with Switzerland and Ireland as the most popular relocation destinations.

Commenting on his company's decision, an Accenture board member asked, "What shareholder would ever vote to incorporate in a country that taxes your worldwide income?"

But it is not just taxation that is chasing corporations out of America. Another top consideration is access to talent. The U.S. now spends more per capita on public education than any other OECD country, but its students test in the bottom decile.

The U.S. Government's National Assessment of Educational Progress generates the "Nation's Report Card" annually. For the last 10 years, less than 25% of American high school seniors achieved a rating of "proficient" in either math or science. In August 2009, the ACT test service announced that only 23% of this year's high school graduates tested adequately in reading, writing, math and science to succeed in college. This is a national embarrassment.

Everyone understands teacher quality is the key determinant of academic success. However, teachers' unions don't allow performance appraisals and merit pay. So, many top-performing teachers get frustrated and opt out, leaving behind the less competent who keep the bar low.

Washington forms commission after commission to find solutions, but nothing much happens. Why? Because no one wants to take on the teachers' unions, which are a major source of re-election campaign dollars.

With the scarcity of technical talent in the U.S. resulting from failing schools, many corporations try to recruit foreign students. But with anti-immigrant regulations and sentiment imposed by Washington, many corporations find the easier course is to just hire abroad. Recently, Bank of America, among others, had to rescind job offers to dozens of foreigners because it had received federal bailout money.

Another major concern for American multinational executives is the increasing political risk in the United States. They now worry about the high cost of uncertainty associated with excessive government activism and a hostile culture.

A culture that turns a blind eye to government failure, but is quick and unrelenting to blame society's ills on business, will naturally and subliminally embrace socialist solutions. The problem is that when one intervention fails, the government attempts to fix its errors with yet more intervention — a sort of creeping socialism that results in a compounding of waste and inefficiency.

So the nationalization of General Motors was followed by Cash for Clunkers and successive bailouts of GMAC. The TARP rescue of banks was followed by government micromanagement, wage controls and punitive salary caps for highly paid talent.

Unfortunately, this kind of populist government meddling in our financial sector is sure to drive talent offshore. In fact, Deutsche Bank CEO Josef Ackermann recently commented "we can't wait to get our hands on all that top talent."

Americans must realize that the geese that lay the golden eggs can take flight. Most U.S.-born multinational board members and executives want their native country to be successful. On the other hand, their fiduciary duty requires that they face reality and respond to global competitors who increasingly have an edge in taxation, access to educated talent and a more supportive political and cultural climate. Taking no action and losing out to the competition breaches their duty to shareholders.

Washington needs to wake up and see the big picture. Now more than ever, it is all about keeping and creating jobs. We can't afford to chase multinational corporations out of the United States.

• Herbold is the retired chief operating officer of Microsoft Corp. and managing director of the Herbold Group.

• Powell is managing director of Alpha-Quest and a visiting fellow at the Hoover Institution. Both live in Bellevue, Wash

memyselfI

11-17-2009, 08:57 AM

Going to get worse if the health care bill passes. Corps will either haul ass outta Dodge or make everyone part time to avoid having to pay full time health care benefits.

HonestChieffan

11-17-2009, 08:58 AM

Amazing thing is while people have been enamored with the "global economy" they failed to understand that jobs are mobile. R and D can be done anywhere and will seek a location that first has talented people and good workers as welll as a friendly investment climate.

As we move away from a pro-business to an anti-business set of policies here, its just good business to seek a better place to do your business.

Its happened for years within our borders with companies in California relocating to better places to do business. We have companies in Missouri who moved for that very reason.

ROYC75

11-17-2009, 09:31 AM

Just what I said would happen during his campaign, Oh wait, he is still campaigning. Yep, jobs on the rise, economy worst. His #'s lie as much as he does, which is often.

KC native

11-17-2009, 09:45 AM

BLAH BLAH BLAH, These guys go to the anecdotal school of BEP. More rhetorical nonsense not backed by any type of empirical data.

Brock

11-17-2009, 09:46 AM

Like they weren't bailing for China, Malaysia, and India to begin with.

fan4ever

11-17-2009, 09:53 AM

Well let's make sure we create an environment where companies have absolutely no excuse not to go elsewhere.

donkhater

11-17-2009, 09:56 AM

The US public school system. The 'public option' in all it's glory.

KC native

11-17-2009, 09:56 AM

Like they weren't bailing for China, Malaysia, and India to begin with.

THIS

Brock

11-17-2009, 10:02 AM

Well let's make sure we create an environment where companies have absolutely no excuse not to go elsewhere.

sure, all we need to do is get Americans to work for 15 cents a day. sound good?

wild1

11-17-2009, 10:06 AM

an Accenture board member asked, "What shareholder would ever vote to incorporate in a country that taxes your worldwide income?"

an idiot.

wild1

11-17-2009, 10:08 AM

Like they weren't bailing for China, Malaysia, and India to begin with.

Those countries can do cheap-labor stuff. The point of this is that the onerous taxation, and the threat of more of the same, is pushing more highly skilled and service-type jobs for the more educated overseas as well.

Ireland is attracting all this business because, after a huge economic disaster in the 1990s, they slashed the corporate income tax down to almost nothing.

patteeu

11-17-2009, 10:39 AM

BLAH BLAH BLAH, These guys go to the anecdotal school of BEP. More rhetorical nonsense not backed by any type of empirical data.

Yes, of course. Tax rates and education quality have no impact on American business or American jobs. :rolleyes:

patteeu

11-17-2009, 10:40 AM

Like they weren't bailing for China, Malaysia, and India to begin with.

Because increasing the incentive to leave is going to reverse the trend? :spock:

Brock

11-17-2009, 10:43 AM

Because increasing the incentive to leave is going to reverse the trend? :spock:

The trend isn't going to reverse. This has been gathering speed for at least two decades. Wow, so they moved their headquarters. BFD, the factories moved years ago.

HolyHandgernade

11-17-2009, 10:44 AM

Because location, location, location still means something, especially in the business world. They just don't want to increase their costs so they sabre rattle a little. Do you have any idea how expensive it would be to up and move a U.S. based major corporation to another cheaper labor country? The language barrier, the education gap, the moving of key employees?

-HH

Brock

11-17-2009, 10:49 AM

Because location, location, location still means something, especially in the business world. They just don't want to increase their costs so they sabre rattle a little. Do you have any idea how expensive it would be to up and move a U.S. based major corporation to another cheaper labor country? The language barrier, the education gap, the moving of key employees?

-HH

Uh, not expensive enough. I helped my former employer set up a factory in China. It wasn't that difficult, and they didn't appear to care about the cost.

patteeu

11-17-2009, 10:50 AM

The trend isn't going to reverse. This has been gathering speed for at least two decades. Wow, so they moved their headquarters. BFD, the factories moved years ago.

Whether the trend can be reversed or not, we'd better figure out that we need to learn to compete against the world, not hide from it. Protectionism will accelerate the damage to our competitiveness and make the end result (when equilibrium is reached) worse for Americans.

HolyHandgernade

11-17-2009, 10:51 AM

Uh, not expensive enough. I helped my former employer set up a factory in China. It wasn't that difficult, and they didn't appear to care about the cost.

Whether the trend can be reversed or not, we'd better figure out that we need to learn to compete against the world, not hide from it. Protectionism will accelerate the damage to our competitiveness and make the end result (when equilibrium is reached) worse for Americans.

Well, then you should be more concerned with China's manipulation of their currency than with US tax policy. Their currency is artificially kept down so the products they manufacture are cheap to the rest of the world. Throw in their disregard for safety and worker protections and it's impossible for a US worker to compete.

Brock

11-17-2009, 10:53 AM

Whether the trend can be reversed or not, we'd better figure out that we need to learn to compete against the world, not hide from it. Protectionism will accelerate the damage to our competitiveness and make the end result (when equilibrium is reached) worse for Americans.

What you need to compete against the world is to invest capital in new equipment. Or you could just move the factory to where people are glad to get a bowl of rice per day. You don't even have to build the factory, the building's free.

Hydrae

11-17-2009, 10:53 AM

BLAH BLAH BLAH, These guys go to the anecdotal school of BEP. More rhetorical nonsense not backed by any type of empirical data.

Maybe not empirical data but some strong circumstantial data IMO:

This ambiguity and the threat of new taxes from Washington, such as cap-and-trade, have already prompted 11 major U.S. companies to move offshore in the past year.

Tyco International, Foster Wheeler, Weatherford International, Nabors Industries, Noble Corp., TransOcean International, United America Indemnity, Cooper Industries, Covidien, Ingersoll-Rand and Accenture have all completed or taken steps to change their domicile of incorporation, with Switzerland and Ireland as the most popular relocation destinations.

I think you overestimate the barriers to relocating. We're not talking about small corporations here, we're talking about the big boys. The small corporations will just die and new ones will pop up in the economies that benefit from this migration.

The US public school system. The 'public option' in all it's glory.
Awwww the excuse for the lack luster American parent for 50 years. Parents do their job and public school would be just fine.

KC native

11-17-2009, 10:55 AM

Maybe not empirical data but some strong circumstantial data IMO:

Go look up how many major corporations are still here and then tell me that 11 of them really make a difference. Hell, I'll narrow it down even more, just look at publicly traded corps and then say that 11 makes a difference.

patteeu

11-17-2009, 10:55 AM

Well, then you should be more concerned with China's manipulation of their currency than with US tax policy. Their currency is artificially kept down so the products they manufacture are cheap to the rest of the world. Throw in their disregard for safety and worker protections and it's impossible for a US worker to compete.

I'm concerned about all aspects of our competitiveness. Our tax policy is an important component.

KC native

11-17-2009, 10:56 AM

I think you overestimate the barriers to relocating. We're not talking about small corporations here, we're talking about the big boys. The small corporations will just die and new ones will pop up in the economies that benefit from this migration.

You underestimate them. The big boys have an easier time moving than the little ones.

Hydrae

11-17-2009, 10:57 AM

Go look up how many major corporations are still here and then tell me that 11 of them really make a difference. Hell, I'll narrow it down even more, just look at publicly traded corps and then say that 11 makes a difference.

I thought you would respond the other direction and ask how many had moved out the previous year. I think that would be a better point and I have no idea what that number would be.

The question is not whether 11 is very many in the big picture, it is a question of whether it is the beginning of a trend. All mud slides start with a trickle.

patteeu

11-17-2009, 10:58 AM

What you need to compete against the world is to invest capital in new equipment. Or you could just move the factory to where people are glad to get a bowl of rice per day. You don't even have to build the factory, the building's free.

I'm all for policies that encourage capital formation. That's why the growth-oriented aspects of the Bush tax cuts (reduced taxes on cap gains and on dividends) were such good ideas. We should be taxing our consumer base and lightening the taxation on production in this country. It's so simple even a caveman can understand it.

patteeu

11-17-2009, 10:59 AM

You underestimate them. The big boys have an easier time moving than the little ones.

That's what I just said.

HolyHandgernade

11-17-2009, 11:01 AM

If they do that, and I don't think they will, they're just going to end up screwing themselves. Believe it or not, not everything is business is profit motivated, but they present it to you like that because all most people understand is basic free enterprise economics. "Supply and demand". There's a lot more social dynamic to running a huge multi-national corporation than just the bottom line. There's standing with a public who is your main consumer. Believe it or not, there's even a conscience among certain business leaders about what is "right" for the country that afforded their success and the employees they provide for. If you really think you can just rip all that, plop yourself in a cheaper country, and expect to run the same or better as it always had, you're naive about the nuances of what makes huge corporations work.

BucEyedPea

11-17-2009, 11:08 AM

Awwww the excuse for the lack luster American parent for 50 years. Parents do their job and public school would be just fine.

:BS: Free the Children!

Government Schools are BAD for your Kids! (http://www.amazon.com/dp/0974925322?tag=lewrockwell&camp=14573&creative=327641&linkCode=as1&creativeASIN=0974925322&adid=0WJRYWKP43T08BA77Z78&)
by attorney James Ostrowski (http://www.lewrockwell.com/blog/lewrw/archives/043031.html)

Even a parent who is a saint is no gaurantee, but of course, blame the parents on all of it.

Excerpt:
“Government schools are truly the foundation of big government today. They supply the funding and the troops [the teachers unions] and they drum the ideology into your children, five days a week for thirteen years. Finally, they render many children less able to survive without constant support and direction from the government. Their message is that people cannot live in freedom and they fulfill that prophecy with each graduating class.”

KC native

11-17-2009, 11:10 AM

I'm all for policies that encourage capital formation. That's why the growth-oriented aspects of the Bush tax cuts (reduced taxes on cap gains and on dividends) were such good ideas. We should be taxing our consumer base and lightening the taxation on production in this country. It's so simple even a caveman can understand it.

Yea, they were such good ideas that benefited us soooooooooo much :rolleyes:

Yea, they were such good ideas that benefited us soooooooooo much :rolleyes:

Of the current issues that face the US on an economic basis, what do you believe was caused by tax cuts?

Was the banking crisis/liquidity issues related to tax reductions on corporations?

Was the housing bubble and the fall out from that related to corporate or individual income taxes?

Do you believe that the current unemployment situation is somehow related to tax reductions?

patteeu

11-17-2009, 11:14 AM

If they do that, and I don't think they will, they're just going to end up screwing themselves. Believe it or not, not everything is business is profit motivated, but they present it to you like that because all most people understand is basic free enterprise economics. "Supply and demand". There's a lot more social dynamic to running a huge multi-national corporation than just the bottom line. There's standing with a public who is your main consumer. Believe it or not, there's even a conscience among certain business leaders about what is "right" for the country that afforded their success and the employees they provide for. If you really think you can just rip all that, plop yourself in a cheaper country, and expect to run the same or better as it always had, you're naive about the nuances of what makes huge corporations work.

All those things are true, but that doesn't mean that strong enough incentives can't overcome those things. Every reason we give a company to leave is another straw on each corporation's back. Some will collapse to the pressure early and some will resist longer. My preference is to line up as many incentives on the side of staying in America and providing jobs here as possible, not to simply expect American-born corporate leaders to stay put out of loyalty to the homeland no matter how onerous we make it for them.

Brock

11-17-2009, 11:14 AM

If they do that, and I don't think they will, they're just going to end up screwing themselves. Believe it or not, not everything is business is profit motivated, but they present it to you like that because all most people understand is basic free enterprise economics. "Supply and demand". There's a lot more social dynamic to running a huge multi-national corporation than just the bottom line. There's standing with a public who is your main consumer. Believe it or not, there's even a conscience among certain business leaders about what is "right" for the country that afforded their success and the employees they provide for. If you really think you can just rip all that, plop yourself in a cheaper country, and expect to run the same or better as it always had, you're naive about the nuances of what makes huge corporations work.

Really? who are these noble business leaders? Why do people line up at Wal Mart to buy products without any thought as to where they came from?

patteeu

11-17-2009, 11:15 AM

Yea, they were such good ideas that benefited us soooooooooo much :rolleyes:

They were great ideas that didn't go nearly far enough.

KC native

11-17-2009, 11:17 AM

Of the current issues that face the US on an economic basis, what do you believe was caused by tax cuts?

Was the banking crisis/liquidity issues related to tax reductions on corporations?

Was the housing bubble and the fall out from that related to corporate or individual income taxes?

Do you believe that the current unemployment situation is somehow related to tax reductions?

Ah disHonest comes along and tries to play smart.

The tax cuts did not cause any of the above situations but that's not what we were discussing. Nice attempt to change the subject though.

What the tax cuts did do was fail to deliver the increased revenue from more economic growth. They increased our deficit immensely, provided no benefit to the economy, and were just plain out stupid during a time of war.

KC native

11-17-2009, 11:18 AM

They were great ideas that didn't go nearly far enough.

:spock: Right, we should have increased our deficits more during a time of war. That's the ticket to economic prosperity. :rolleyes:

HolyHandgernade

11-17-2009, 11:23 AM

Really? who are these noble business leaders? Why do people line up at Wal Mart to buy products without any thought as to where they came from?

Did WalMart relocate to Southeast Asia? We're talking about two different business concepts here. Being multi-national is very different from being foreign-based. So, yes, I think if the Waltons all of a sudden decided they were going to move their corporate headquarters overseas and they think the American public (because we know how patriotic the consumer base is that shops at WalMart is) is just going to say, "No biggie, give me my cheap plastic shit, please!", I don't think you have a grasp on the social dynamic. People consider WalMart an American company, no matter where they get their stuff from. But, if the suddenly became a Southeast Asia company, yes, I think their customers would say screw you and shop at KMart or Target and WalMart would soon go out of business in the U.S.

-HH

HonestChieffan

11-17-2009, 11:27 AM

Ah disHonest comes along and tries to play smart.

The tax cuts did not cause any of the above situations but that's not what we were discussing. Nice attempt to change the subject though.

What the tax cuts did do was fail to deliver the increased revenue from more economic growth. They increased our deficit immensely, provided no benefit to the economy, and were just plain out stupid during a time of war.

So you blame the tax cuts for an increse in the deficit. If that is the case, are their data to support that? In other words, looking at federal tax revenue before and after the tax cuts, would the revenue from before been high enough to offset the spending including the spending on war efforts?

KC native

11-17-2009, 11:29 AM

So you blame the tax cuts for an increse in the deficit. If that is the case, are their data to support that? In other words, looking at federal tax revenue before and after the tax cuts, would the revenue from before been high enough to offset the spending including the spending on war efforts?

Do you own homework, but the answer is no. Even without considering the wars the tax cuts wouldn't have paid for themselves.

HonestChieffan

11-17-2009, 11:43 AM

I assume that you understand that tax rate and tax revenue are related but not tied to the actual reveues. I say I assume that because I'll give you the benefit of the doubt.

In fact, the greatest contributors to the change in deficit before and after the tax cuts were a reduction in the taxable revenues the economy created and for Defence expenditures that outstripped all other factors.

Had the tax cuts not have been done, we would still have been in a deficit, that proven by the numbers.

But what is impossible to quantify is had the tax cuts not have taken place, would the economy have tanked sooner or deeper?

To state that no benefit came from the individual tax cuts is far reaching. I would have to think that individuals who saw taxes cut felt they benefitted from not having to pa the tax to the federal government.

Would you agree or do you stand with your previous statement that there was "no benefit to the economy"?

Hydrae

11-17-2009, 11:45 AM

Did WalMart relocate to Southeast Asia? We're talking about two different business concepts here. Being multi-national is very different from being foreign-based. So, yes, I think if the Waltons all of a sudden decided they were going to move their corporate headquarters overseas and they think the American public (because we know how patriotic the consumer base is that shops at WalMart is) is just going to say, "No biggie, give me my cheap plastic shit, please!", I don't think you have a grasp on the social dynamic. People consider WalMart an American company, no matter where they get their stuff from. But, if the suddenly became a Southeast Asia company, yes, I think their customers would say screw you and shop at KMart or Target and WalMart would soon go out of business in the U.S.

-HH

Yep, that is why Target (French owned) has such a hard time getting a foothold in the US.

KC native

11-17-2009, 11:57 AM

I assume that you understand that tax rate and tax revenue are related but not tied to the actual reveues. I say I assume that because I'll give you the benefit of the doubt.

In fact, the greatest contributors to the change in deficit before and after the tax cuts were a reduction in the taxable revenues the economy created and for Defence expenditures that outstripped all other factors.

Had the tax cuts not have been done, we would still have been in a deficit, that proven by the numbers.

But what is impossible to quantify is had the tax cuts not have taken place, would the economy have tanked sooner or deeper?

To state that no benefit came from the individual tax cuts is far reaching. I would have to think that individuals who saw taxes cut felt they benefitted from not having to pa the tax to the federal government.

Would you agree or do you stand with your previous statement that there was "no benefit to the economy"?

Yes, I do and until you can prove that the tax cuts helped the economy I will stay there. We've had two periods of real life experience with supply side economics and both times the tax cuts have failed to deliver what they promised.

Brock

11-17-2009, 12:01 PM

Yep, that is why Target (French owned) has such a hard time getting a foothold in the US.

I don't think they are French-owned, but I don't think anyone would care if they were. People buy whatever is cheapest, that's what we've become.

HonestChieffan

11-17-2009, 12:07 PM

Yes, I do and until you can prove that the tax cuts helped the economy I will stay there. We've had two periods of real life experience with supply side economics and both times the tax cuts have failed to deliver what they promised.

So the burden of proof to support your arguement falls on me? Thats rich. Can you provide data to support that tax cuts resulted in a reduction in federal tax revenue?

Hydrae

11-17-2009, 12:08 PM

I don't think they are French-owned, but I don't think anyone would care if they were. People buy whatever is cheapest, that's what we've become.

It appears I was wrong. I could have sworn that I had heard multiple times that it was a French based company.

You second line though agrees with my point, people will seldom care where the corporate headquarters are as long as they are getting the deal they want.

KC native

11-17-2009, 12:16 PM

So the burden of proof to support your arguement falls on me? Thats rich. Can you provide data to support that tax cuts resulted in a reduction in federal tax revenue?

You can't prove a negative dumbass.

Edit: I forgot how stupid you are. I can't prove that the tax cuts had no impact therefore it falls upon you to prove they did.

KC native

11-17-2009, 12:17 PM

Yep, that is why Target (French owned) has such a hard time getting a foothold in the US.

I don't think they are French-owned, but I don't think anyone would care if they were. People buy whatever is cheapest, that's what we've become.

They're publicly traded. TGT is their ticker.

HonestChieffan

11-17-2009, 12:22 PM

You can't prove a negative dumbass.

Edit: I forgot how stupid you are. I can't prove that the tax cuts had no impact therefore it falls upon you to prove they did.

But you can prove that tax revenues went down as a result of two previous tax cuts?

HonestChieffan

11-17-2009, 12:24 PM

http://www.heritage.org/Research/Taxes/images/chart.gif

fan4ever

11-17-2009, 12:25 PM

Awwww the excuse for the lack luster American parent for 50 years. Parents do their job and public school would be just fine.

Spot on. My wife has been teaching for 25 years and now parents, rich and poor, are advesaries, not allies, when it comes to holding their kids accountable for their behavior and their grades.

It's easier for politicians, mostly conservatives since the NEA is pretty much a democrat lock, to blame teachers.

Holding parents accountable is way more complex and probably unfixable . . . so make teachers jump through hoops so it looks like you're trying to do something.

HonestChieffan

11-17-2009, 12:26 PM

So ends the discussion whereby facts and reality come to bear on your foolish statements to the contrary.

You can go back to being the newfound economic expert and seer of the stock market now. Check those numbers on your etfs and those mutual funds. And get back to your annuity projects.

KC native

11-17-2009, 12:37 PM

http://www.heritage.org/Research/Taxes/images/chart.gif

So, Raygun's first tax cuts were passed in 1982, the economy had already returned to cyclical growth as evidenced by your table (look at the growth in '81 over '80). So, growth was the primary determinant for the increase in revenues. When you can prove that tax revenues went up solely due to tax cuts please let me know (as of yet no one has, not even heritage). What you've just done is put the cart in front of the horse and act like the cart is the one that does the pulling.

KC native

11-17-2009, 12:39 PM

So ends the discussion whereby facts and reality come to bear on your foolish statements to the contrary.

You can go back to being the newfound economic expert and seer of the stock market now. Check those numbers on your etfs and those mutual funds. And get back to your annuity projects.

:shake: Look at the explanation in my post above.

HonestChieffan

11-17-2009, 12:39 PM

No doubt.

The data are wrong.

Do you wear a clown suit to work?

KC native

11-17-2009, 12:43 PM

No doubt.

The data are wrong.

Do you wear a clown suit to work?

Just because you are innumerate and can't read a table doesn't mean I can't.

wild1

11-17-2009, 12:43 PM

Yep, that is why Target (French owned) has such a hard time getting a foothold in the US.

Target is not "french owned", it's traded on the NYSE. It was started in Minnesota in the 60s by an entrepreneur and is still based there.

WTF?

KC native

11-17-2009, 12:43 PM

Target is not "french owned", it's traded on the NYSE. It was started in Minnesota in the 60s by an entrepreneur and is still based there.

WTF?

Repost

patteeu

11-17-2009, 01:32 PM

:spock: Right, we should have increased our deficits more during a time of war. That's the ticket to economic prosperity. :rolleyes:

Who said anything about increasing our deficits more? As I said at the time, we should have cut (or at the very least limited) spending during that time period, but that doesn't mean that these particular tax cuts were bad. Quite the opposite is true. We needed an even stronger move toward competitiveness and away from consumption. We've needed that for a long time.

KC native

11-17-2009, 01:35 PM

Who said anything about increasing our deficits more? As I said at the time, we should have cut (or at the very least limited) spending during that time period, but that doesn't mean that these particular tax cuts were bad. Quite the opposite is true. We needed an even stronger move toward competitiveness and away from consumption. We've needed that for a long time.

Were you not implying that we needed more of the bush tax cuts?

patteeu

11-17-2009, 01:39 PM

Ah disHonest comes along and tries to play smart.

The tax cuts did not cause any of the above situations but that's not what we were discussing. Nice attempt to change the subject though.

What the tax cuts did do was fail to deliver the increased revenue from more economic growth. They increased our deficit immensely, provided no benefit to the economy, and were just plain out stupid during a time of war.

Speaking of trying to play smart, you can't just lump all the "tax cuts" into one big amalgamation and expect to come to any sensible conclusions about each of the reform components. Some of the tax cuts did better than others when it comes to stimulating growth. The tax cuts for the lower classes were always very unlikely to pay for themselves but they were included for political reasons. The tax cuts on investments shouldn't be smeared with the results of the populist measures that were passed at the same time.

patteeu

11-17-2009, 01:43 PM

Were you not implying that we needed more of the bush tax cuts?

We need more of some of the Bush tax cuts, yes.

KC native

11-17-2009, 02:17 PM

Speaking of trying to play smart, you can't just lump all the "tax cuts" into one big amalgamation and expect to come to any sensible conclusions about each of the reform components. Some of the tax cuts did better than others when it comes to stimulating growth. The tax cuts for the lower classes were always very unlikely to pay for themselves but they were included for political reasons. The tax cuts on investments shouldn't be smeared with the results of the populist measures that were passed at the same time.

Sorry, but they were passed together and will be considered together. You can't cherry pick some at the expense of others. Beyond that, the corporate and wealthy welfare cuts are the ones that drive the majority of it anyways. The lower class tax cuts don't have a meaningful impact on the overall Bush tax cut.

KC native

11-17-2009, 02:17 PM

We need more of some of the Bush tax cuts, yes.

So, you think it's wise to widen the deficit we had at a time when we could have been doing something to narrow it?

patteeu

11-17-2009, 02:35 PM

Sorry, but they were passed together and will be considered together. You can't cherry pick some at the expense of others. Beyond that, the corporate and wealthy welfare cuts are the ones that drive the majority of it anyways. The lower class tax cuts don't have a meaningful impact on the overall Bush tax cut.

This post is beyond dumb. If you insist on lumping the Bush tax cuts together then you don't have any place in this discussion.

patteeu

11-17-2009, 02:37 PM

So, you think it's wise to widen the deficit we had at a time when we could have been doing something to narrow it?

I think deficit issues should be addressed by cutting spending. I think some of the Bush tax cuts were valuable efforts to improve our economy, but they were way too limited.

KC native

11-17-2009, 02:51 PM

I think deficit issues should be addressed by cutting spending. I think some of the Bush tax cuts were valuable efforts to improve our economy, but they were way too limited.

Ah, so we needed larger deficits then by that logic because tax cuts rarely (and at this point they haven't but I'm not going to say never) pay for themselves.

KC native

11-17-2009, 02:54 PM

This post is beyond dumb. If you insist on lumping the Bush tax cuts together then you don't have any place in this discussion.

Horseshit pat. Corporate Welfare and Welfare for the Wealthy were almost 90% of bush's tax cuts.

HonestChieffan

11-17-2009, 02:55 PM

Ignore facts. Then you can just make stuff up.

KC native

11-17-2009, 02:56 PM

Ignore math then you can just make stuff up like me.

FYP

Hydrae

11-17-2009, 03:01 PM

Target is not "french owned", it's traded on the NYSE. It was started in Minnesota in the 60s by an entrepreneur and is still based there.

WTF?

Noted and admitted to the mistake. Thanks

BigRedChief

11-17-2009, 03:06 PM

Horseshit pat. Corporate Welfare and Welfare for the Wealthy were almost 90% of bush's tax cuts.THIS!

patteeu

11-17-2009, 04:06 PM

Ah, so we needed larger deficits then by that logic because tax cuts rarely (and at this point they haven't but I'm not going to say never) pay for themselves.

I'm not going to continue discussing this with you as if you were capable of doing it like a grownup if you keep ignoring the things I say.

Read my previous post again and you'll see that that's explicitly not my logic. If you still think it is, read it again. Repeat as necessary until you achieve understanding.

patteeu

11-17-2009, 04:08 PM

Horseshit pat. Corporate Welfare and Welfare for the Wealthy were almost 90% of bush's tax cuts.

Even if that were true, it wouldn't be a defense for criticizing the 10% as if it were no different than the 90%.

The same thing could be seen today. If taxes were cut to promote private investment, more 'real' jobs would be created thereby increasing the tax base. The GDP would expand and actual wealth would be created.

Tax increases will NEVER cut the deficit sufficiently. We have too many politicians in Washington who are too willing to spend the money given to them. The only real and responsible solution is spending cuts.

This would require hard decsions by the American people about what role the government should have. Unfortunately most of the population is too immature to take care of themselves to believe they don't need the government to redistribute the wealth to them to survive, so I'm not holding my breath that this will happen.

The same thing could be seen today. If taxes were cut to promote private investment, more 'real' jobs would be created thereby increasing the tax base. The GDP would expand and actual wealth would be created.

Tax increases will NEVER cut the deficit sufficiently. We have too many politicians in Washington who are too willing to spend the money given to them. The only real and responsible solution is spending cuts.

This would require hard decsions by the American people about what role the government should have. Unfortunately most of the population is too immature to take care of themselves to believe they don't need the government to redistribute the wealth to them to survive, so I'm not holding my breath that this will happen.

The same thing could be seen today. If taxes were cut to promote private investment, more 'real' jobs would be created thereby increasing the tax base. The GDP would expand and actual wealth would be created.

Tax increases will NEVER cut the deficit sufficiently. We have too many politicians in Washington who are too willing to spend the money given to them. The only real and responsible solution is spending cuts.

This would require hard decsions by the American people about what role the government should have. Unfortunately most of the population is too immature to take care of themselves to believe they don't need the government to redistribute the wealth to them to survive, so I'm not holding my breath that this will happen.

Tax revenues didn't go up because of the tax cuts. They went up because the economy was coming out of a recession in 1982. Tax revenues are going to rise when the economy is resuming growth and your baselining in a recessionary period.

Face it, Supply side economics is a hoax. The increased revenue from tax cuts never materializes.

KC native

11-18-2009, 09:05 PM

Yes.

:shake:

headsnap

11-18-2009, 09:27 PM

Tax revenues didn't go up because of the tax cuts. They went up because the economy was coming out of a recession in 1982.

Those two sentences are not unrelated...

donkhater

11-18-2009, 10:14 PM

Tax revenues didn't go up because of the tax cuts. They went up because the economy was coming out of a recession in 1982. Tax revenues are going to rise when the economy is resuming growth and your baselining in a recessionary period.

Face it, Supply side economics is a hoax. The increased revenue from tax cuts never materializes.

What the hell do you think brought the economy out of a recession? Printing money? Bank bailouts? Government 'investment'? Countries don't just come out of a recession. Those tax cuts spurred the longest period of economic growth in the history of the world. You are totally wrong about this. The right tax cuts do increase revneue.

Allowing free people to invest their money in real technologies and businesses is what advances the economy, not some bureaucrat-induced handout.

Unfortunately, federal spending increased beyond the extra revenue brought in (Surprise!!!!!), balooning the deficit (although miniscule compared to this year alone). Increased taxation not only won't trim the deficit it will kill whatever hope this country has to create any wealth.

KC native

11-19-2009, 02:23 AM

Those two sentences are not unrelated...

Correlation doesn't equal causation.

KC native

11-19-2009, 02:31 AM

What the hell do you think brought the economy out of a recession? Printing money? Bank bailouts? Government 'investment'? Countries don't just come out of a recession. Those tax cuts spurred the longest period of economic growth in the history of the world. You are totally wrong about this. The right tax cuts do increase revneue.

Allowing free people to invest their money in real technologies and businesses is what advances the economy, not some bureaucrat-induced handout.

Unfortunately, federal spending increased beyond the extra revenue brought in (Surprise!!!!!), balooning the deficit (although miniscule compared to this year alone). Increased taxation not only won't trim the deficit it will kill whatever hope this country has to create any wealth.

The economy goes in and out of recession all the time. It's called the business cycle. Despite everyone's attempts so far, no one has been able to stop it. Now, you can exacerbate the high's and low's due to policy but outside of Hoover there have been no presidents who are responsible for economic growth or bust. You can argue that different presidents' actions have exacerbated things (ie Bush's appointments to regulatory positions that didn't believe in regulation) but it is stupid to give a president credit/discredit for the economy.

As far as your bolded erroneous claim, those tax cuts did not spark the longest growth period in the world. In 1982, the economy was finally recovering from the pernicious stagflation of the mid to late 70's. Paul Volker deserves more credit than any president does for that. He had the will to take interest rates into the teens to break inflation. Once he steadied the price level the economy took off. This prosperity didn't last though (it wasn't abnormally short either). We went into another recession in '87 which crippled banks, S&L's, and commercial real estate until 1991.

patteeu

11-19-2009, 03:14 AM

Tax revenues didn't go up because of the tax cuts. They went up because the economy was coming out of a recession in 1982. Tax revenues are going to rise when the economy is resuming growth and your baselining in a recessionary period.

Face it, Supply side economics is a hoax. The increased revenue from tax cuts never materializes.

If you'd rather look at those tax cuts as causing economic growth and only secondarily increasing revenues instead of increasing revenues directly, I'm OK with that. The purpose of supply side tax cuts is to unbridle the economy. That's why they're also called growth oriented tax cuts. We need some economic growth right about now.

patteeu

11-19-2009, 03:15 AM

Correlation doesn't equal causation.

Causation does result in correlation though.

BucEyedPea

11-19-2009, 07:53 AM

If you'd rather look at those tax cuts as causing economic growth and only secondarily increasing revenues instead of increasing revenues directly, I'm OK with that. The purpose of supply side tax cuts is to unbridle the economy. That's why they're also called growth oriented tax cuts. We need some economic growth right about now.

What's wrong with cutting spending? I wish you'd argue for that just as passionately as you do for tax cuts.

donkhater

11-19-2009, 07:58 AM

The economy goes in and out of recession all the time. It's called the business cycle. Despite everyone's attempts so far, no one has been able to stop it.

I would say that it is exactly 'everyone's attempts' that causes the economy to go in and out of recession

Now, you can exacerbate the high's and low's due to policy but outside of Hoover there have been no presidents who are responsible for economic growth or bust. You can argue that different presidents' actions have exacerbated things (ie Bush's appointments to regulatory positions that didn't believe in regulation) but it is stupid to give a president credit/discredit for the economy.

As far as your bolded erroneous claim, those tax cuts did not spark the longest growth period in the world. In 1982, the economy was finally recovering from the pernicious stagflation of the mid to late 70's. Paul Volker deserves more credit than any president does for that. He had the will to take interest rates into the teens to break inflation. Once he steadied the price level the economy took off. This prosperity didn't last though (it wasn't abnormally short either). We went into another recession in '87 which crippled banks, S&L's, and commercial real estate until 1991.

This totally contradicts your first statement. If the economy was simply coming out of recession, Volker's lowering of the interest rates is not causation either.

I would be interested to know what you think will pull us out of the current recession? Lower interest rates won't do it. They are essentially zero now. Government spending? Nothing?

To think that chopping the federal tax rates in half had nothing to do with the economic boom in the 80's seems ridiculous. Why would tax rates be cut if not to ignite the economy?

BucEyedPea

11-19-2009, 08:02 AM

Spot on. My wife has been teaching for 25 years and now parents, rich and poor, are advesaries, not allies, when it comes to holding their kids accountable for their behavior and their grades.

It's easier for politicians, mostly conservatives since the NEA is pretty much a democrat lock, to blame teachers.

Holding parents accountable is way more complex and probably unfixable . . . so make teachers jump through hoops so it looks like you're trying to do something.

The system needs an overhaul including how teachers are taught. This is also a reason why parents are not as involved or even able to help—they're a product of the same system. The govt likes it that way so they can indoctrinate the kids the way they want.

Example: Florida has virtual online classes for school subjects. My daughter is doing it for Biology at home. The course is loaded with political correctness and environmental activism. The left-wing agenda is laced through various subjects. Her recent assignments were to: plant a tree for bio-diversity and write a letter to her congressman on green issues. It's also full of global warming claims, something my daughter doesn't accept but I told her to give them the answer they wanted. At her last private school she did her science fair project on a sub-topic related to GW regarding the expansion of water which disproved that related point.

Totally bogus. I just bet this stuff is in the other courses, except math
( well they do have the new fuzzy math).

I've also ordered school social studies textbooks in the past for summer work when she was in her former school and had to return some for blatant false hoods about America. It's left wing indoctrination in public school.

BucEyedPea

11-19-2009, 08:03 AM

TOur public schools work quite nicely, sorry yours suck.

California? LMAO ROFL

BucEyedPea

11-19-2009, 08:12 AM

http://www.heritage.org/Research/Taxes/images/chart.gif

Interesting. But that's not an accurate reason why even if it appears to correlate. The tax cut was followed by the largest tax increase in history a year later. So the cuts never stayed. That's not noted in your image. Therefore something else led to the increase in revenue. Inflation unexpectedly died down and RR resorted to a Keynesian stimulus fix which heated the economy and brought in the revenue.

KC native

11-19-2009, 08:39 AM

If you'd rather look at those tax cuts as causing economic growth and only secondarily increasing revenues instead of increasing revenues directly, I'm OK with that. The purpose of supply side tax cuts is to unbridle the economy. That's why they're also called growth oriented tax cuts. We need some economic growth right about now.

:shake: No Pat. The economy moved back to growth which is what drove the increase in revenues. Raygun's tax cuts had no discernible effects. If tax cuts were the surefire thing you say they were then we should have seen a massive increase in economic growth over the bush years however that's not what happened.

KC native

11-19-2009, 08:53 AM

I would say that it is exactly 'everyone's attempts' that causes the economy to go in and out of recession

No, the economy, and capitalism based economies, have a natural boom and bust cycle. You can go back as far as stats are recorded and clearly see that. We had recessions before the Fed was created. People have attempted to repeal the business cycle and prevent recessions but that has proven to be a fool's game of epic proportions. A natural vacillation between growth and contraction is healthy for an economy. Excess has to be shaken out from time to time to keep everything from getting overheated and eliminate inefficient players.

This totally contradicts your first statement. If the economy was simply coming out of recession, Volker's lowering of the interest rates is not causation either.

I would be interested to know what you think will pull us out of the current recession? Lower interest rates won't do it. They are essentially zero now. Government spending? Nothing?

To think that chopping the federal tax rates in half had nothing to do with the economic boom in the 80's seems ridiculous. Why would tax rates be cut if not to ignite the economy?

I didn't say Volker's lowering of rates was the cause of the economy returning to growth. It is a factor but most importantly Volker created conditions for the economy to resume steady growth due to breaking the inflation trend from the 70's. The absolute level of interest rates is quite meaningless in reality. What matters is where those interest rates are relative to other economies' interest rates. If someone can borrow at 10% and still make a decent profit they are going to do it. Also, it doesn't matter if that borrower has to pay 10% interest if everyone else in the world has 12-15% interest.

As far as the current recession is concerned, there really isn't much we can do to "pull" ourselves out of it. We have to wait for the economy to get back to equilibrium and while that may be painful it is necessary. In the meantime, our policy makers were put into a precarious position due to the massive drop in spending so they enacted the stimulus to prevent that drop from being a negative feedback loop which would have thrown us into a depression.

Also, as far as the current recession is concerned, I think we are nearing the end of it. I think we're going to see a slight double dip but I think we should be finished bottoming out sometime around the end of Q2. Now, I don't think the economy is going to rocket off of that bottom but I think we'll hit a steady state and after a few quarters of that we will see a return to growth. When we do return to growth I don't think it will be the trend line growth we have seen in the last 20-30 years but more along the lines of PIMCO's new normal thesis which says that we will have growth but it won't be as robust as before.

patteeu

11-19-2009, 01:52 PM

:shake: No Pat. The economy moved back to growth which is what drove the increase in revenues. Raygun's tax cuts had no discernible effects. If tax cuts were the surefire thing you say they were then we should have seen a massive increase in economic growth over the bush years however that's not what happened.

I didn't say anything was surefire. That's as stupid as saying that supply side economics are a hoax and that tax cuts haven't led to tax revenue gains.

BigChiefFan

11-19-2009, 02:05 PM

Competing with slave labor in a global economy puts us at a disadvantage. It's that simple.

Chief Faithful

11-19-2009, 02:47 PM

Competing with slave labor in a global economy puts us at a disadvantage. It's that simple.
That is why it is important for US companies to invest in technology to equalize the disadvantage. Of course, that re-invest money is a limited resource being drained by taxation.

patteeu

11-19-2009, 05:43 PM

Interesting. But that's not an accurate reason why even if it appears to correlate. The tax cut was followed by the largest tax increase in history a year later. So the cuts never stayed. That's not noted in your image. Therefore something else led to the increase in revenue. Inflation unexpectedly died down and RR resorted to a Keynesian stimulus fix which heated the economy and brought in the revenue.

You're having the same problem the KC Native is having. You're lumping all tax policy into one amorphious blob and assuming that every tax cut/increase affects economic activity in the same way. They don't. Taxes on ice cream sundaes will have a major impact on the ice cream sundae business but probably won't have much impact on how people choose to invest their money, for example.

The 1982 tax increases were on such things as excise taxes and unemploment insurance taxes. They didn't really have much if any effect on the marginal tax rate on productivity (e.g. income tax rates) which is the key feature that supply siders point to when they suggest that a tax cut will lead to growth and increased tax revenues.

The 1983 tax increase was on Social Security. Again, this didn't affect the marginal tax rate on productivity.

Reagan slashed marginal tax rates not once, but twice during his administration. It wasn't until after he left office that some of those cuts were reversed.